Hey Mark Cuban: Of course Facebook is charging you — what did you expect?

Over the past few days, there’s been a lot of sound and fury about how Facebook is allegedly fiddling with the way it filters the news feed to make it harder for brands to get as large an audience for their content as they used to. Billionaire sports-team owner Mark Cuban and former Star Trek actor George Takei are just two of the more prominent users to complain that this tweaking of Facebook’s “EdgeRank” algorithm amounts to a kind of extortion, since it requires users to pay in order to ensure their message reaches their fans. To which the only possible response is: Really? That surprises you? What else did you think Facebook was going to do when it gave you a giant social platform for nothing?

One of the first major complaints came in a piece in the New York Observer that accused the social network of being “broken on purpose.” Not long afterward, a blog called Dangerous Minds wrote a long polemic about how what the social network was doing was “the biggest bait-and-switch in history” — since users (including brands) were enticed to use the service on the understanding that they could use it to build up a giant fan base, and were now being charged for the right to reach those same fans. The cost to do this by paying for sponsored posts, the blog said, was just too exorbitant:

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“We simply can’t afford to pay Facebook $2000 to $3200 a day and we can’t afford to do nothing, either. Their shockingly greedy business plan offers us no alternative and we’re not alone.”

Hiding valuable content or blocking spam?

In response to this criticism, Facebook explained — both in a post by one of its engineers and in comments to TechCrunch and Ars Technica — that the newsfeed filtering was designed to eliminate spam and noise, and that it was constantly being tweaked in order to show users things they were actually interested in, not just things that brands wanted them to see. The message seemed pretty obvious: don’t be spammy with your posts and lots of your users will still see them for free. And if you want to spam them anyway, you will have to pay for sponsored posts in order to do that.

This didn’t stop the criticism from flowing, however: one user wrote an open letter to Mark Zuckerberg, complaining about the moves by the social network and urging the founder and CEO to remain committed to his stated goal of “giving people the power to share and make the world more open and connected.” Actor George Takei responded to this letter with a Facebook post, saying he was devoting a chapter in his upcoming book to the issue. On Tuesday, Mark Cuban — who had been posting complaints on Twitter for days about Facebook’s behavior — unloaded to Dan Lyons at ReadWrite about the impact that the changes were having, and how he wasn’t going to stand for it any longer. The sports mogul and star of TV show Shark Tank said that he was shifting the focus not just of his own presence or that of the Dallas Mavericks but all of the other businesses in which he is an investor to other platforms, including MySpace:

“We are moving far more aggressively into Twitter and reducing any and all emphasis on Facebook. We won’t abandon Facebook, we will still use it, but our priority is to add followers that our brands can reach on non-Facebook platforms first. We have already pushed more to Twitter. The new Myspace looks promising.”

Filtering is necessary for Facebook, and for users

As Wired points out in a response to Cuban’s complaints — and App.net founder Dalton Caldwell also does a good job of explaining — this kind of criticism makes little sense, unless you assume that Facebook is supposed to be a utility of some kind, broadcasting the messages of its users far and wide without any kind of filtering whatsoever. The reality is that a proprietary platform like Facebook is very much a double-edged sword, and Cuban and Takei are feeling the sharpness of that alternate edge: yes, it reaches a lot of people, but it is also a business that faces significant financial pressure.

Do Cuban or any of Facebook’s other critics really think that Twitter or MySpace are going to be any different? Twitter started off as a much more open platform than Facebook — which is one of the reasons that users like me have responded so negatively to some of the restrictions it has been imposing on external services — but it is heading down the same inexorable path. In order to justify their multibillion-dollar market value, both companies have to find new sources of revenue, and traditional advertising just isn’t going to do it. Sponsored content is the future, whether we like it or not.

It’s one thing to excuse George Takei for not realizing the implications of this, but Mark Cuban is a notoriously sharp businessman who routinely criticizes entrepreneurs on his TV show for failing to understand how markets work. Facebook is a business, not a charity or a platform for social well-being — and it provides that platform free of charge, on the understanding that users agree to be marketed to in a variety of ways. The idea that it should somehow allow Cuban to spam all his followers with marketing content for nothing is nonsensical.

Not only does Cuban’s criticism not make much sense from a business standpoint, but as even social-media evangelist Robert Scoble points out, what Facebook is doing by trying to tweak its filtering algorithms is arguably in the best interest of users as well, since they are already being overwhelmed by noise and marketing spam. From that perspective, Facebook has to do what it is doing or it will suffer a lot more damage than some angry emails from celebrity users. We can argue about how it is filtering and the way it is communicating that to users, but the fact that it is doing so seems inevitable.

What about for facebook pages/groups that are not being done for money? I don’t see how they can possibly be expected to “pay to promote”.

And as a user, I don’t need facebook filtering my timeline. I’m quite capable of doing it myself. Why can’t I have the option to “opt out” of this “feature”? And I don’t mean going to each page I have liked one by one and clicking some setting. I mean one simple button I can check or uncheck that turns off facebook’s ability to do this to my timeline. There’s no question it is Bait N Switch what they have done.

Boo hoo. Mark Cuban and others can no longer always get free marketing through Facebook. There are no parties here worthy of sympathy. FB is finding a new way to monetize by putting the distribution of spam behind a pay wall. Never saw that coming …

All the comments here have been valid and perceptive. The fact also is that facebook will do as it pleases. If you are a brand and you have crippled yourself by buying into the facebook craze without looking out for the best interest of your brand or business, that it’s your folly.

Mark Cuban and any brand or business owner should be looking to refocusing strategies. Linkedin, twitter, raveorbash, myspace and other social networks exist. Use them

Great article, although I am pretty sure like any one who owns the communication channel is entitled to enforce how the access point will work. Like a TV channel decides how the pricing of the ads works, more price allows for more the of people to see the ads for longer time. Facebook is like that with additional perspective of it being personal. We can say that Facebook is being short sighted with this approach, because brands will think that they are not being treated fairly, but I dont think calling them evil helps. Ultimately if the business decides thats its not getting ROI through Facebook, they will stop advertising.

The Unethical part is that Facebook promoted their Ads (that are paid for by businesses) as being unique and superior because if a user clicked on an Ad then decided to like your page, you have a free connection to that user from then on.

With the changes they are taking away something already bought and paid for. They are not just changing the value of future spending with them, but diminishing the return you get, dramatically, of money spent with them in the past.

My issue here is that Facebook is charging me twice. FIrst, I paid facebook for ads to build the “likes” to my page. At that point, the expectation facebook set was that the people who liked my page would see my posts. Over time, we spent a substantial amount building those facebook “likes”.

Now, they “adjust their algorithm” and we find ourselves in a position of paying facebook again to use the thing for which we already paid. Not a good business practice.

If we’d known at the beginning that “likes” had a different value than we were led to believe, we would not have been willing to pay so much to accumulate them.

This would be similar to if Apple first allowed us to purchase thousands of tracks through the iTunes store, then came along retroactively and changed the license so that we then had to pay for each time we listened to one of those tracks we’d already purchased. The trouble is that there is no licensing agreement that controls the value or use of a “like”. Facebook can change the definition at will – so “likes” become a non-commodity.

I think you’re missing the point. Cuban is kind of a blowhard, sure, but I “like” stuff like Captain Sulu because I want to see it, not let Facebook decide for me. Believe it or not, I *want* to see things, and that’s why I click like.

The problem isn’t the whiney people looking for an audience. It’s not good for the consumers.

That is a fair point, Jeff, which Brian and others have also raised — and I think that is one of the real risks for Facebook with this strategy: not so much the Mark Cubans of the world but users themselves who are perceiving it as having less and less value for them.

Great article Matthew: it’s a good perspective on the issue and you raise valid points – to a point. I agree with Michael C and Geoffrey R in calling out the two real issues behind why there is such an outcry.

There is a real issue with the way the company has managed expectations with corporate clients (I’ve heard the reassurances first-hand) in order to continue corporate investment.

There’s also something wrong with their sense of what an opt-in means. To make a comparison: if I opt into an email service or subscribe to an RSS feed I expect to get everything and I’m left to do my own filtering. I know it’s not an email service or feed, but I don’t want them throttling my personal connections either. Throttling seems at odds with the concept of social networking.

First of all, as a user, I’m very likely missing content that I would like to see. I ‘liked’ all these pages, I want to see their content, but I’m not allowed to see it (without checking those pages regularly) because Facebook needs to withhold it from me so they can charge those pages to distribute that content to me. I, as a user, don’t feel like I ever got a chance to customize my feed to see what I did and didn’t want to see, and really, I’d like to see as much as possible without being overwhelming.

Second of all, and more importantly, it doesn’t “have to be like this” – there are certainly other business models for building off a platform. LinkedIn “sells its data” through its LinkedIn Recruiter, and Automattic provides WordPress consulting services while keeping the base platform (WordPress.com and self-hosted .org) free and open-source. Neither of these innovations requires the companies to cripple their platforms in order to make money off of them. It just seems that Facebook simply isn’t creative enough to come up with a revenue model that makes them money other than advertising.

I think the issue isn’t so much whether Facebook has the right to charge for features but how it goes/went about it.

For example, Facebook is saying that it throttles brand posts because they don’t want newsfeeds to get spammy. But that seems to imply that users who proactively liked a page don’t want the messaging.

It’s hard to measure intent but if I like a page, it’s because I *do* want that entity’s messages. And if Facebook is concerned about things getting spammy, then that’s a design issue that could be resolved by giving the user filtering options upon liking a page. For example: How often do you want to hear from Brand X; or, Would you like a daily digest from Brand X instead of individual posts.

I think the bait and switch argument has merit. Brands have spent millions driving users to their Facebook pages. This is both in the form of active online marketing but also in display advertising, television commercials and the like by promoting Facebook URLs rather than their own. That’s been a huge promotional windfall for Facebook. And yes, brands have benefitted from doing it but now they’re being told that even though people actively want their content, they have to pay to actually get it to them.

All within Facebook’s rights as a business? Of course. But clumsily implemented and shady for those companies that have invested heavily in creating their presences there.

In this context, the way you keep saying that what FB is doing is totally understandable is like saying that it is totally understandable why a burglar might steal. Yes, it is understandable, but it doesn’t make it right.

> I think the bait and switch argument has merit. Brands have spent millions driving users to their Facebook pages. This is both in the form of active online marketing but also in display advertising, television commercials and the like by promoting Facebook URLs rather than their own. Thatâ€™s been a huge promotional windfall for Facebook. And yes, brands have benefitted from doing it but now theyâ€™re being told that even though people actively want their content, they have to pay to actually get it to them.

This is a great point. I wonder if brands could bring a class action suit against FB for this bait and switch practice.

Cuban expected the FB stream to act (perpetually) like RSS or Twitter streams — where every new entry reaches every user that “subscribed” (aka. “liked” their fan page). This seems perfectly reasonable… but FB acted in their own interests and put a stop to it. Cuban (and others) have realized that brand-building (probably) shouldn’t be delegated to other websites… Frankly, their complaints make perfect sense in this light.

They expected the stream to be like RSS or Twitter. In the end… forget all the social media BS and build a brand around your own website instead of your FB fan page — Cuban realizes this (now) and is acting accordingly. Taking pot shots at FB makes sense in this light.

How do you know you will reach fewer of your followers? It’s impossible to say that for sure. In any case, Facebook says if your message is high quality and non-spam then it will reach as many as it always did — possibly even more. For free.

There are so many interesting things about this itâ€™s hard to know where to jump in. First, the notion that free could ever be a sustainable business model. Bait-and-switch is also an unsustainable business model. Combine the two and you have a book by Chris Anderson and the Facebook business model.
The problem is not that Facebook wants to, is entitled to, and now has a fiduciary duty to make money. The problem is that Facebook continuously fails to manage expectations. It either encourages or allows its users to believe one thing, up until the moment it does another thing.
One of the things people respond most vehemently to is the perception of injustice. It doesnâ€™t seem fair that people are offered the opportunity to communicate freely — in exchange for data mining me – with as many people who will listen, and then when they do that the rules are changed.
What weâ€™ve got here is a failure to communicate, captain.

I agree that it fails to manage expectations well, and is also guilty of moving the goal-posts repeatedly, Geoff. I will definitely give you that — but it is hardly unique in that respect :-) Thanks for the comment.

Disagree. My understanding was that in exchange for Facebook “using” my content and connections, I could use its platform. Facebook still gets my content and connections, but now I have to pay. That’s a very real, negative change.

Mathew, I think some of the other more prominent polemics about FB ads missed the point I was raising in my article. At the root of FBs model is a conflict of interest: the worse their service ‘works’ for brands, the more brands will need to pay FB. Why? Because originally FBs model was different, the better it worked the more brands invested in and became dependent on the platform.

Sure FB has the ‘the right’ to operate this way–to throttle access and charge for unequally for passage–but it is undeniably unethical and evil. It’s a short term strategy that might make sense in a revenue spreadsheet but is so clearly stupid and short sighted to anyone who thinks about it for two seconds.

Thanks, Ryan — I can see how a brand might be uncomfortable with this happening, just as game developers were when FB tightened the rules around how viral their content could get. But I find it difficult to believe that anyone didn’t see it coming, and I also find it hard to see this as “unethical” in any real sense of that word. Facebook owns the platform, and it distributes whatever messages it wants to in whatever fashion it wants, and continually tweaks how that happens — that is the deal and to some extent always has been.

Matthew, some would certainly say Facebook did very little in controlling game spam. They were pretty complicit in my opinion. Games provided user time on the platform and added a dimension of utility. So for a time spam was fine because it got the job done in shifting the metrics to differentiate facebook from other online ad offerings. The game makers also poured a tonne of cash into ads when facebook “tightened up” on spam.

Was that a warning sign to brands of what was to come? Sure was! Everyone was reassured though. All the noises coming from facebook were that the connection belonged to the brand and the user, mutually. Around that relationship facebook would make money but not directly with it. They had to convince ad-land they weren’t just another channel. They managed it partially though a huge amount of spend didn’t come their way as agencies played “wait & see”.

Facebook have been under pressure to extract that extra spend – they’ve resorted to squeezing it out rather than offering value to attract it. Agencies and client side teams are now in the real position of having to put budget into advertising their advertising. That’s not good for brands or users in the medium term let alone long term. At first it will be budget that was intended to provide value in the form of content and engagement. Later it will mean expanding budgets to account for this new dimension of inefficiency thanks to facebook playing middle man. Once the money calls go up the chain of command someone is going to call time on Facebook, just as Cuban has.

I think you’re still missing my point: at the heart of this revenue model is a conflict on interest for FB. Whether intentionally or not, the less my posts show up, the more I am inclined to have to pay FB. Which means that FB and I now have divergent interests.

It’s like Goldman Sachs being short a position they turn around and sell to an unsuspecting client as an investment. The worse it does for their client, the better it is for the house.

This is FUNDAMENTALLY different than most ad models. Take Tumblr’s Radar posts. That’s new advertising space that people have to pay to be a part of–in that case, I didn’t previously have access to it so if I want it, I have to pay for it. Their interest is to make that space as attractive and valuable as possible to me so I’ll pay for it. In this case, our interests are aligned.

I’m not missing your point at all — I totally get that. And the comparison to brokerage firms is an apt one, I think, since they are acting in their own interests as well in most cases, and if you are lucky then their interests align with yours. I think a better comparison would be a shopping mall — Facebook allows you to set up a kiosk, and charges you nothing, unless you want to pay more for a better spot. Same principle.